SHANGHAI, China-Internet game operator Shanda Interactive Entertainment Ltd. caught the attention of the Chinese wireless market Tuesday after announcing it had taken a 19.5-percent stake in wireless media firm Sina Corp.
The $230 million acquisition, which was revealed in an Securities and Exchange Commission filing late Friday, surprised analysts, who said it was most likely completed without Sina’s knowledge. Shares of both companies spiked following the news-Sina showed the most marked increase, up 21 percent, to $28.03, between Thursday’s close and mid-day Tuesday-and rivals NetEase and Sohu jumped as well.
Shanda indicated it may consider increasing its stake in the cross-town wireless company, and some believe the transaction could spark a bidding war for Sina, which offers mobile news and other online content. Sina responded by adopting a shareholder rights plan.
Sina stock dropped earlier this year after its fourth-quarter results revealed it had been generating revenues from services like fortune-telling and astrology, which have been effectively banned by the Chinese government. Shanda, on the other hand, has been recording solid numbers. A merger between the two could result in the nation’s first major Internet/wireless conglomerate, with combined 2004 revenues of $365 million.
Foreign companies such as Yahoo! are also said to be interested in Sina, but any such deal would likely face heavy scrutiny from Chinese regulators.
